A study on XYZ Advanced Education

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XYZ Advanced Education (XAE) founded in 1998, its main objective was to construct an academic (on-line) network in order to offer an educational experience and opportunity to the world regardless of physical location of institution or student. Since the start of the organization it has achieved annual growth and has assumed and retained a leading position in the industry. XAE main operations and local sales offices are located in the U.S.A., other sales and marketing divisions are located in Europe, Asia and Africa to provide high quality services and offer specific solutions to the markets. Operational focus consist largely of the mediation between suppliers of advanced educational services and its consumers around the globe offering a unique platform to broaden their educational horizon.

Current situation and market position

Currently XAE offers a leading global network includes 45 accredited institutions in North America, Latin America, Europe, and Asia. Together, these independently branded universities offer more than 130 career-focused, multi-year undergraduate, master's and doctorate degree programs in a number of career fields including engineering, education, business, health care, hospitality, architecture, and information technology. Programs and services related to these programs are offered on-line as well as on campus.

Chapter 2

Budgeting processes & methods

XAE formulates budgeting processes to assist in assigning and managing tasks and responsibilities in a service oriented organization environment. The goal of this process is to deliver its products within a predictable schedule and budget. XAE implements Zero Based Budgeting (ZBB) for its newly developed programs and services while Activity Based Budgeting (ABB) is implemented to prepare budgets for existing programs and services. The implementation of these methods allow for a reasonable amount of control in the case of ZBB as past reference lacks. The ABB methodology allows for accurate budgeting due to the relatively simplistic structure of the business processes. Annual budgets are prepared for the various divisions by the central office while monthly budgets are prepared in accordance with the annual budgets by the divisions itself, this allows for a regional adjustment and adaption to current situation.

Utilization of information & performance measurement.

Budgets are utilized to set targets while the achievement of those targeted objectives is rewarded by various bonus scheme's, the involvement and influence in operational processes

requires a wide understanding of the implications among the organization, therefor monthly meetings are held to discuss and explain the relevant information to the relevant groups within the divisions, the adjustment and utilization of incentives are largely based on budget and are therefor an integral part of the budget preparation process. Comparison to actual results in order to control and direct operations are a vital part in the assessment of operational performance, the measurement of performance according to budget allows for the revision of strategies by either divisional management as well as through main office by adjusting appropriate strategies and operations.

Chapter 3

Management accounting system

Increased competition has led the organization to enhance their competitive advantage through advanced management accounting systems and advanced information systems.

An overall management system is required to reveal targets and to guide decisions of all those involved in product selection, development and sales towards achievement of corporate goals. To accommodate these management accounting tasks the organization applies a Corporate Management Accounting System (CMAS). This automated system makes it easier to make management decisions by providing management with required and relevant information. The CMAS system automates the business processes, enables remote work with the information and allows for the measurement of performance by management through the adaptation and implementation of tools in this system.

Information distribution and subsequent managerial decision making

Access to information is a vital part in the strategy, providing the efficient management tools ,improving quality of decisions, improving productivity due to reduced document circulation time, accumulating the information for use in a knowledge base, optimizing the overall business processes, their execution and control. Conducting analysis of program requirements is an important step in an organization's operational processes.

Requirements of the system.

Providing efficient tools

Improving quality of decisions

Improving productivity

Accumulation of information

Optimizing business processes

These requirements have lead to the installment of an internal information network providing necessary tools and required information to assist in any of the businesses processes. The budgeting process focuses on developing corporate strategy; creating an annual budget; approving the annual budget; and monitoring budget-to-actual results. Also included are performance measures related to the budget process.

Chapter 4

Costing processes and methods

The Activity Based Costing (ABC) methodology has been adapted to suit the organization, as to how this methods should be best applied in company accounting is dependent on a variety of elements. The development and implementation of a cost management system to provide maximum benefit however must become an integral element beneficial to the business processes and operating systems. The methods in cost management has forced accounting to adjust the typical product costing methods by applying all organizational costs in a more relevant matter. Organizational costs can be attached to program cost hereby setting the company's long-term sales and profits objectives,

implemented strategies

Understanding of the organizational cost structure and influence of products,processes and b activities while improving product costing to enhance product and customer profitability and satisfaction. A thorough understanding of implications in regard to costing allows for the acknowledgement of opportunities to reduce or avoid costs. Implementation of information of other activities and non-financial information, including program development, IT, purchasing and marketing are beneficial to the quality of decisions providing a cost accounting framework efficiently reliable and accessible.

Implications, limitations and results

Chapter 5

Capital decision making.

The organization starts the capital decision making process by determining the organization's goals and objectives. This enables management to identify the necessary resources to meet the program requirements based on the program's goals and objectives.

Project funding and capital management relies on the adoption of corporate governance structures for their financing decisions and capital structuring, XAE utilizes the Internal Rate of Return (IRR) for some of its investment decision making processes. However due to the relative simplicity nature of it's operations the development of new services and programs is in most cases an expansion of an existing operation, therefor use of any method is rarely implemented as there is abundant relevant information available to merit quality decision making in regard to capital allocation and investments.

Performance measurement

Capital performance measurement is undertaken by the central U.S. Office, the results show association between capital and board structure. Positive relationships between capital structure and board composition, board skills, and CEO due to the private nature of the organization

Chapter 6

Capital structuring

XAE was a public company and was traded on NASDAQ until 2007 when a buy back took place and currently XAE is owned by a private investor group.

Equity valuation methods include approaches based on the price-earnings (P/E) ratio, cash-based approaches, such as the Dividend Discount Model (DDM) and the Discounted Free Cash Flow Model (DFCFM), and accounting-flow-based approaches such as the Residual Income Valuation Model (RIVM) and the Abnormal Earnings Growth Model (AEGM).